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Reorganizing Effectively for Small Companies

In the corporate world, reorganizations are a way of life. As companies grow and try to maneuver through the ever-changing business climate, executives want to “streamline” and “restructure” to stay competitive as possible.
Large corporations usually hire seasoned experts to help plan and implement their reorganizations. Many smaller, growing companies, however, rely mostly on the internal management team for their restructuring. Since many of these smaller companies are still managed by their founders, such attempts at change often are planned with too much subjectivity.

When starting a reorganization initiative, the management team needs to clearly understand that the company or the business environment or both are changing – and that the company itself needs to change as well. Change is very, very difficult for any organization so changing for changing sake would be a big mistake.

Once the executive strategy clearly identifies a need to reorganize, there are a few important things to consider for small, growing companies.

Start with the Organization Chart – without names: A common mistake that many smaller business management teams make is discussing a reorganization by “putting the names” of employees on the board first. A successful reorganization initially focuses on the functional roles without any names. This way the most efficient organization can be identified without being biased by personal attachment to certain employees.

Be honest in evaluating employee abilities: Once this new organization is identified, some employees will naturally fall into the different functional roles. Others, who had been major contributors in the “entrepreneurial” years, may not fit so well within the new organizational chart. That’s common because many generalists, who excel in a small company’s non-structured environment, don’t have the specialized skills required to contribute at the same level moving forward.

Don’t put a round peg in a square hole: Be very careful not to put unqualified people in important functional roles. As obvious as this may sound, I’ve been amazed by how often this happens. By putting the wrong people into the new organization chart, a company may be taking steps backwards, rather than moving forward as intended.

Consider outside talent: It is critical at this point to consider outside talent to fill some of the functional roles, especially for smaller companies that have built their management team mostly from within the organization. Having an outside perspective is critical when reorganizing and moving to the next level of growth. This doesn’t mean that a company has to completely change its culture or perspective. The fact that a small company is reorganizing means that it has had some level of success up to now. However, gaining that different perspective, one that can see the blind spots of the founding team, can be the difference between ongoing growth or possible stagnation or worse.

Remove “forced” titles: Out of this execise, sometimes there is a tendency to invent out-of-the-norm titles. Mostly likely, you’re looking for that round hole for that particular round peg. Don’t.

Make changes in one swift move: The reorganization should not be an on-going process. Once the plan is formulated, act appropriately as soon as possible. No doubt there are rumors all over the office and absent of information, people tend to think the worse.

In summary, reorganization is an important part of corporate growth. For smaller companies, there are certain common pitfalls that need to be avoided. Planned appropriately, however, reorganizing can give a small, growing company an opportunity for expanded success moving forward.

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I have long been a proponent of organizing first, then putting people in place…which is very different than Jim Collins in Good to Great, who suggests getting the right people, then decide what you’re doing. Yes, it’s about the people but first it’s about organizing for your company’s success.